The June numbers for imports of whole milk powder (WMP) to China that were released last week show a continuation of a downward trend.
WMP imports to China were down 48% and skim milk powder (SMP) was down 30%. At 242,000t, it means the total imports for the month on average were down 22%. This is a decline for the fourth month in a row.
This impacts mainly on New Zealand dairy product, as they represent about 90% of total imports to China and they were down 49%.
When we look at it on a year-to-date basis to level out the seasonality, it means WMP imports into China are down 5.5% so far in 2022.
It is interesting to see Chinese dairy superpower Yili is investing a reported US$1.1bn in a new global smart manufacturing hub in inner Mongolia.
The investment will consist of a cheese plant, model farm, visitor and research centre and employ a large number of people and produce over 60,000t of infant formula.
In the context of a declining European dairy footprint, to see other parts of the world investing to such an extent for what might be an inferior product frustrates those that have opportunities.
Despite the Chinese cooling of dairy demand, European butter future markets have actually started going in the opposite direction now.
After six weeks of continual declines, future prices are up over €200/t this week and back up to where they were at start of July, with almost €7,000/t on offer.